Ultralight Startups? Startups on a Shoestring!

But ultralight startups? That sounds to me like an extremely small and economical startup. I like the image it conjures. I think of ultralight as backpacking stoves, tents, sleeping bags, plus sporting equipment. It all sounds good to me.

Berry points out he first heard the phrase in an article by Tom Abate in the SF Gate. The premise appears to be that technology makes this no/low capital startup a possibility. From Abate:

From his apartment in Berkeley’s student ghetto, 19-year-old Raymond Lei runs an online T-shirt printing business that grossed more than $60,000 in August, putting him on track to post more than $700,000 in sales this year.

The UC Berkeley sophomore, who started ooShirts.com in his junior year at Cupertino’s Monta Vista High School, represents a new wave of startups that require little or no capital – Lei says he’s spent just $2,200 so far – by finding new ways to produce and sell products or services online.

“We have no firm data on the frequency of such events, but there’s no doubt that the new online model makes it very easy to start a business,” said Steve King of Emergent Research, an East Bay consultancy that has tracked “ultralight” startups. “If you’re consistent and willing to work, it doesn’t take a lot of capital.”

For example, Lei never touches the T-shirts that he sells to clubs, companies or other groups. Instead, his genius has been to attract customers to ooShirts by using tactics that increase his ranking in free searches for terms like “custom T-shirts.” His $2,200 cash investment went mainly to hire a programmer from India to help create the Web-based tools that visitors use to design and order their shirts.

This ultralight model, where basic technology is used to organized resources reminds me of the earliest (often economically/functionally oriented) definitions of the entrepreneur (for example Say and Cantillon). Actors who organize resources and take on risk.

In many ways, this is simple small business. ie — start a firm hauling garbage/junk using your older brothers pick up (or one you bought for $1500) or selling credit card processing (or other goods and services via multilevel schemes).

The WSJ has a recent article highlighting some firms that have been bootstrapped for under $150. One is a food tour business in Washington DC. From Startups on a Shoestring:

With creativity, commitment and resilience, an entrepreneur can turn even a small investment into an impressive business.

The stories we found contain several common threads. Hard work is one. If you don’t have a lot to spend, expect to put in a lot of time and energy. As Jeff Swedarsky of Alexandria, Va., put it, he started his food-tour business for “$100 and 100,000 hours.”

But the bootstrapping entrepreneur can also get help from lots of technological tools. For instance, professional-looking websites and automated phone-answering systems can speed sales and make a start-up look more impressive to potential customers.

Technology, in fact, is a big reason it’s possible to launch a business so cheaply. Thanks to the proliferation of the Internet and the accessibility of once-costly technology, start-up costs “have plummeted in the last 10 years,” says Bo Fishback, vice president of entrepreneurship at the Ewing Marion Kauffman Foundation, a Kansas City, Mo., nonprofit devoted to entrepreneurship. “It’s gotten so much easier to reach mass markets and test out ideas. This is something that’s becoming accessible to anyone with an idea.”

A few of these ultralight startups do morph and evolve into gazelle type of firms that not only provide a large income to the owner, but increase wealth for many employees, partners, and society more broadly.

These ultralight/bootstrapped startups are a great way for students to get entrepreneurial experience that they can build off of